Carbon dioxide industry strikes deal to maintain supply

The carbon dioxide (CO2) industry has struck an agreement to ensure businesses have a sustainable supply, even as energy prices spike, the government said on Monday.

The move will ensure that major supplier CF Fertilisers can remain operational, with CO2 suppliers agreeing to pay the US fertiliser company a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high.

CF Fertilisers produces around 60 per cent of the UK’s commercial CO2 requirements. The new agreement will run until January next year.

Last month, the government agreed an exceptional three week arrangement with CF Fertilisers that allowed the company to continue operating while the industry moved towards this agreement.

“Today’s agreement means that critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support,” Business Secretary Kwasi Kwarteng said.

The government’s short term arrangement with CF Fertilisers allowed the company to restart operations and produce CO2 at two plants, offering tens of millions of pounds of state support to avert a food supply crunch.

Wholesale gas prices have soared this year as economies reopened from Covid-19 lockdowns and high demand for liquefied natural gas in Asia pushed down supplies to Europe, leading to a shortage of CO2 in the food industry.

Some of Britain’s meat and poultry processors would have run out of CO2 – also used to put the fizz in beer, cider and soft drinks – within days, forcing them to halt production.

Environment Secretary George Eustice said: “CO2 is vital for our food and drink sectors. The government has taken decisive action in these exceptional circumstances to allow a deal to be reached which will continue the supply of CO2 to businesses – including thousands of food and drink businesses – up and down the country.”

Last week, Kwasi Kwarteng temporarily exempted parts of the CO2 industry from competition law to facilitate this agreement and provide further security of CO2 supplies to businesses.

In addition, major commercial CO2 producer Ensus reopened its Wilton plant last week following temporary closure for planned maintenance, further securing supplies. The Wilton plant can produce up to 40 per cent of the UK’s CO2 requirements.